NEW YORK — Breaking up is hard to do, even when it is consensual, but that is what’s likely to happen to the U.S. and Europe on Wednesday.

The widely expected decision by the Federal Reserve to raise rates for the first time in nearly a decade would put an end to the transatlantic compact of convergent monetary policies that helped the world economy recover from the financial crisis.

While the Fed starts raising rates to prevent stoking up inflation and financial bubbles, the European Central Bank has vowed to keep stimulating the eurozone’s anemic growth with negative interest rates and large bouts of bond-buying. The parting of the ways is inevitable and accepted by both camps, given the relative strength of the U.S. economy and the struggles of the European one.

But what happens in the new era of divergent economic policies is a crucial question for policymakers, politicians, investors and financial firms.

Here are five key topics that will take center stage after Wednesday.

1. The politics

Ever since the crisis thrust central banks center stage as the only players with the resources to fight global recession, their actions have become more controversial and politically sensitive.

The Fed’s first rate-hike since 2006 is fraught with political intrigue in the U.S. Conservatives who love to bash the Fed say it is long past time for the central bank to remove itself as the dominant economic policy making machine in Washington.

Many on the right will likely dismiss the rate hike as coming far too late. And if markets react badly and the economy takes a significant hit, it will give conservatives — including presidential hopefuls Rand Paul and Ted Cruz — even more ammunition to criticize the Fed and push efforts in Congress to open the central bank to more political scrutiny while curtailing some of its powers.

“The Fed should have raised interest rates in 2010 and 2011 and if they did that they would actually be in a position to cut them today,” said James Rickards, a central bank critic and chief global strategist at West Shore Funds. “The Fed is on the brink of committing a historic blunder that may rank with the mistakes it made in 1927 and 1929. By raising into weakness, they will likely cause a recession.”

The Fed move also has major implications for the 2016 presidential campaign. Democratic front-runner Hillary Clinton is counting on an improving economy and rising wages to help drive her into the White House next year. The Fed’s gentle rate hikes — and Yellen’s promise to pause at any sign of trouble — may not change that dynamic.

But many on the American left say that with no inflation in sight and wage gains more a dream than a reality, it remains too soon for Yellen to pump the brakes on the economy. They fear that the Fed will slow job growth and put a lid on wages just as workers are starting to feel some real benefits after years of stagnant take-home pay.

Markets have celebrated Draghi’s desire to pump cash into the economy, nicknaming him “Super Mario.” This time, however, investors were not impressed with the Italian’s superpowers. After talking tough about the need to do everything possible to boost growth in the eurozone, Draghi’s move earlier this month to keep open the monetary spigot disappointed the markets.

Stock markets tumbled across Europe and the euro rallied after the news, the exact opposite of what the ECB wanted. Investors’ reaction to the news was summed up by Yellen herself when she told a Congressional hearing: “The market expected some actions that were not forthcoming”.

Draghi’s misstep may strengthen the hand of his opponents within the ECB, notably the representatives of Germany’s central bank. In keeping with the country’s inflation-fighting focus, Bundesbank chief Jens Weidmann and ECB board member and former Bundesbank deputy governor Sabine Lautenschläger had opposed more stimulus in the run-up to the ECB’s decision. Even if inflation in Europe is as prevalent as overcooked pasta in Italy — virtually non-existent — it is almost certain that the German contingent will try and push for more tightening during Mr. Draghi’s moment of weakness, especially at a time when many European governments are moving away from fiscal austerity.

2. Equity and bond markets

If the Fed does hike by a quarter percentage point on Wednesday it will be the most well-telegraphed rate increase in central bank history and markets should at least initially take it in stride. A sharp sell-off in stocks is unlikely unless the central bank dramatically changes its outlook for future rate hikes.

Yellen has said repeatedly in recent public appearances that she looked forward to the day the Fed could move back toward a more normal policy while suggesting the U.S. economy could handle a short series of modest rate hikes. “Markets expect the Fed to do it and have already priced it in at a 85 or 90 percent likelihood,” said David Kotok, chief investment officer at Cumberland Advisors. “The worst thing that could happen now is for the Fed not to hike.”

The bigger concerns for market analysts include both the rising dollar and signs of stress in high-yield corporate bonds, both in the U.S. and abroad, especially in the energy sector. New York-based Third Avenue Management last week blocked investors from withdrawing money from its nearly $1 billion junk bond fund as it attempted to liquidate amid big losses.

Higher rates could make corporate bond defaults more likely and investors are already bailing out of the sector, pulling $3.8 billion out of high-yield funds in the week ended December 9, the biggest move in 15 weeks. The effective yield on U.S. junk bonds is now 17 percent, the highest level in five years, according to Bank of America Merrill Lynch data.

Global equity markets are also coming off a difficult week as major averages plunged along with commodity prices, driven down by the continued collapse in crude oil. The concern now is about contagion in the high-yield bond market in a rising-rate environment.

In Europe, any downward move in the single currency against the dollar (see below) will help multinationals exporting their wares globally.

The impact on corporate and sovereign bonds, however, is likely to be mixed. Higher interest rates in the U.S. should dampen a popular trading strategy that saw investors borrow at low rates in the U.S. and put that money in riskier but higher-yielding instruments, including some European corporate and sovereign debt.

The partial unwinding of that “carry trade” could also have an impact on emerging markets’ bond, equity markets and currencies, which have come under renewed pressure in recent months. In China, any strengthening of the dollar as a result of the Fed move is likely to prod the Chinese authorities to persevere with their recent policy of letting the yuan depreciate against the greenback.

3. The dollar and the euro

In theory, higher interest rates should push the dollar higher against the euro by making the U.S. currency more lucrative to hold than its European counterpart. That outcome would help eurozone economies such as Germany and Italy, which rely on a cheaper currency to sell their products abroad.

Currency movements have not sparked political tensions on either side of the Atlantic.

The problem is that markets have been expecting the U.S. rate hike for some time. The dollar has gained nearly 10% against the euro this year alone and many experts believe that rally is running out of steam.

“The rate rise on Wednesday isn’t going to be a good event for the dollar,” said Christopher Vecchio, currency strategist at DailyFX, a research firm. He added that the fate of the dollar/euro exchange rate will be determined by the strength of the U.S. economy in 2016 and the future path of U.S. interest rates rather than this week’s move.

So far, currency movements have not sparked political tensions on either side of the Atlantic. But with the diverging paths of monetary policies likely to persist for months if not years, policymakers in the U.S. and Europe will keep a close eye on each other’s currencies.

The U.S., for the moment, seems happy to let the euro weaken in order to stimulate the economy of its biggest trading partner. But for how long? Should the euro drop further from current levels, American multinationals and other exporters are likely to start complaining of an uneven playing field and unfair competition from their European rivals, raising the prospects of currency wars or at least verbal sparring between the two camps.

4. What will the Fed do after Wednesday?

That’s what most market participants would really like to know. Unlike previous rate-hiking cycles, this time U.S. economic growth does not appear to be on a solid path. Many economists believe the Fed is raising rates now so it has room to cut them again should the economy enter a rough patch in 2016.

Michael Pento, an outspoken Fed critic, is not convinced. “It’s like saying that someone who is freezing to death should take off their coat so they can put it back on while they are close to dying,” said Pento, president of Pento Portfolio Strategies, a money management and research firm.

Others, however, believe that if the unemployment and wage growth data remain strong, the Fed will embark on a sustained period of rate hikes which could include three or four more moves in 2016.

5. The banks

Long-suffering Wall Street executives have been waiting for days like Wednesday for a long time.

By raising rates, the Fed will help a key driver of financial groups’ profitability: their lending margins — the difference between the rate at which they borrow and the one at which they lend. That number is now hovering around 11-year-lows, pinching profits and shareholders returns.

One, small rate increase may not be enough to boost bank profits at a time of increased regulation, slow trading in fixed-income products and market turbulence. Executives caution that the Fed would have to move more aggressively before banks feel some relief from years of crimped margins and can restart their lending engines.

For European banks, the Fed’s decision will be less important since few have ventured into the U.S. lending markets. With troubled European sovereign debt now mostly off their books, the main worry for lenders based in London and on the Continent will be the bleak growth prospects in the eurozone.

R. T. Greenwood

“helped the world economy recover from the financial crisis.” – actually helped the world OVERrecover which is proving to be just as bad a problem if not worse.

Posted on 12/14/15 | 2:47 PM CET

R. T. Greenwood

The unemployment rate is propaganda. The job participation rate is a problem. It indicates we are on a clear path to a welfare state which means lower productivity and efficiency.

Posted on 12/14/15 | 2:55 PM CET

John Haddock

If I recall correctly, it was the Fed that understood the need to stimulate the economy with its QE program and took early action. At the same time, the ECB stood pat and supported the misguided ‘austerity’ approach in the EU. Only when that turned out to be disastrous did the ECB switch course and follow the Fed’s path. So it’s hard to claim they’ve been working together.

Posted on 12/14/15 | 3:35 PM CET

Chris

Soooooo….First the FED will not be raising any rates. That being said, how is it that Dems, who hate, ‘Trickle Down Economics’ support QE? So printing kash out of thin air and only giving it to the absolute richest amongst us in the ‘Hope’ this newly created free money works its way down to the working stiff w/ no inflation? QE is more like trickle down ass-rape. WTF. Unreal these Marxist.